U.S. Bancorp is requesting the New York state court to make a Countrywide Financial unit to repurchase over 4,000 loans in a mortgage pool. This was done to repair breaches of contract related to improper underwriting, according to a Bloomberg report.
The bank filed a lawsuit that claimed that Countrywide agreed when it sold the pool in 2005 that it would repurchase all the loans within 90 days of receiving notice of a material breach.
U.S. Bancorp is trustee for HarborView Mortgage Loan Trust 2005-10, which held the pool. The pool’s original value was $1.75 billion, the bank stated in court papers.
The lawsuit said that the mortgage pool became delinquent and defaulted at a fast rate soon after they were purchased by U.S. Bancorp. Countrywide allegedly did not follow its underwriting guidelines.
U.S. Bancorp asked the court to find that because of a breach of its seller representation, Countrywide must repurchase all the loans. The court can also order Countrywide to repurchase all defective loans, U.S. Bancorp said.